News Story

Michigan’s Most Expensive Mass Transit Agencies

Even at a price now above $4, a gallon of regular unleaded gasoline will move the typical personal car and its passengers at least 20 miles — and often much further. But according to the most recent data available from the federal government's National Transit Database, two of Michigan’s public transit agencies report that $4 isn’t enough spending for them to move just a single rider even a single mile. In both cases, NTD data shows that the agencies charge riders less than 10 percent of the operating cost spent to move them around, with state and local taxpayers picking up at least two-thirds of the rest.

House Bill 4023, sponsored by GOP state Rep. Dave Agema of Grandville, would make it harder for these transit agencies to offload their costs onto the general public. The bill would require that the state’s transit riders pay average fares high enough to bring in at least 20 percent of the system’s operating expenses. For 2009, the last year of data reported online for NTD, just four of the state’s 15 largest transit and bus systems reached this level of user support. For those systems that do not hit the 20 percent level of user support, the proposal would penalize them by reducing their funding from the state’s Comprehensive Transportation Fund. The CTF is funded by taking a portion of the gas tax revenue and other road tax money paid by motorists.

The bill is co-sponsored by Republicans Ken Yonker of Caledonia and Tom Hooker of Byron Center.

Moving one person a single mile on Detroit’s People Mover required an average of $4.28 in 2009, and according to the NTD, rider fares covered only 7 percent of the operating cost. State and local taxpayers picked up more than 80 percent of the remaining cost.

But the record for both costliest transit rides and lowest rider support in 2009 was set on the other side of the state. Users of Holland’s Macatawa Area Express bus system paid fares equal to just 5 percent of the cost of their trips. And the NTD reports show that it cost the system $5.46 every time it moved one of those passengers a single mile. 

NTD reports that each of the other 13 large systems moved passengers for less than $2 per passenger mile and seven did it for less than $1.

NTD data also shows that the Capitol Area Transportation Authority, serving the Lansing area, received 27 percent of its operating funding from fare box revenue in 2009, making it the bus system with the state’s highest level of user support among the 15 largest transit and bus agencies. Bus systems in Jackson, Muskegon and Flint also surpassed the 20 percent mark.

The 11 bus services that did not hit the 20 percent mark include both of the Detroit-area systems: DDOT, with a service area primarily within the city, charged rider fares equaling 18 percent of operating costs; and SMART, the primarily suburban system, charged 15 percent. The figures are 16 percent for users of "The Rapid" in Grand Rapids, and 17 percent for the Ann Arbor Transportation Authority.

Asking transit users to pay one-fifth of the cost of their fare is not an unheard-of standard elsewhere in the nation. Bus systems in Washington, D.C., New York City, Chicago and elsewhere each surpassed 20 percent rider fare support in 2009.

As with a private passenger car, operating expenses are not the entire cost of bus and transit service. Capital expenses — such as the purchase of the buses — are not counted against the 20 percent requirement of the Agema proposal. The requirement would apply to operating expenses only.

If the 11 transit agencies below 20 percent had met the 20 percent level in 2009, then the total additional revenue from fares would have been at least $12.3 million, nearly enough to pay for the People Mover’s entire operating budget that year. And the $12.3 million in savings would be enough to entirely pay for eight of the 15 largest transit agency budgets.

Rep. Agema has introduced a version of this bill (and an amendment to another bill that would have accomplished the same purpose) during the two previous sessions of the Michigan Legislature. The idea has never yet received a hearing or vote.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.